X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The U.S. Securities and Exchange Commission (SEC) is currently considering a proposal that would require institutional investors to account for their holdings in prime money-market funds—those that invest in short-term corporate debt—using a variable net asset value (NAV), rather than the stable NAV that is currently the industry standard. The proposal was announced in June, and the deadline for comments is September 17.

The goal would be to increase transparency, in order to avoid a run on money funds in future financial crises like the run that occurred in September 2008 when the Reserve Primary Fund “broke the buck,” repricing shares below $1 to devalue investors’ holdings. Critics of constant NAV money funds argue that their constant $1 price masks movement in the market and that if they’re going to promise liquidity on par with bank accounts, they should be regulated like banks. The problem is that what may seem like a fairly minor accounting change could have a major impact on corporate usage of money funds.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.